What Is a Smart Contract?
A smart contract is a computer protocol that facilitates, verifies, or enforces the negotiation or performance of a contract. Smart contracts allow for trustless transactions between two parties without the need for an intermediary. They are self-executing and can be programmed to automatically execute when certain conditions are met. This eliminates the need for manual processing and reduces transaction costs associated with traditional contracts.
Smart contracts use blockchain technology to store data securely on a distributed ledger system, making them immutable and tamper-proof. The code within these contracts is written in such a way that it cannot be changed once deployed onto the blockchain network; this ensures that all participants involved in the agreement have access to an accurate record of their contractual obligations at any given time. Additionally, because they exist on decentralized networks, smart contracts provide greater transparency than traditional paper agreements as all changes made by either party are visible to everyone else involved in the agreement.